Opinion: The Texas Supreme Court’s recent opinion in In Re Lisa Laser USA, Inc. and Lisa Laser Products, OHG, Relators continues the trend of cases enforcing forum selection clauses in contracts. In this case, a Texas company entered into a distribution contract with a California company. The forum selection clause stated that the courts of Alameda County, California had exclusive jurisdiction and venue over any dispute arising out of the contract. After the Texas company sued the California corporation in Texas, the California company challenged the filing of the lawsuit, claiming it could only be filed in California. The Texas company raised a number of arguments, but the Supreme Court held that the forum selection clause was enforceable, noting that a party will be held to its agreement to be sued in a specific forum unless the forum selection clause is unreasonable, and that inconvenience and additional expense are not sufficient to show that that a forum selection clause is unreasonable.
Significance: Before signing a contract, always read the contract, including what are commonly referred to as the “boilerplate” provisions, which are typically located near the end of the contract. Contract provisions addressing what law will govern the contract and where any lawsuit arising out of the contract must be filed are typically found in the boilerplate. The burden of having to sue in another state or defend yourself in another state has to be considered when evaluating whether to enter into a contract. That burden includes increased costs associated with long distance litigation and loss of the “home field advantage.”